Hoping for a Larger Social Security COLA in 2027 Could Backfire

"Millions of older Americans rely on Social Security to cover their costs. And thankfully, Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. Without COLAs, Social Security benefits would not be able to keep up with inflation. And while investments - particularly stock portfolios - are often able to outpace inflation, many retirees don't have those assets at their disposal."

"Social Security COLAs are based on third quarter inflation data, so it's too soon to know what next year's raise will look like. However, inflation readings along the way can offer clues. Following April's Consumer Price Index, which showed a spike in inflation, the nonpartisan Senior Citizens League updated its 2027 COLA projection to 3.9%."

"A larger raise in the new year might seem like it would help your finances. But it's important to remember that Social Security COLAs are not designed to help retirees beat inflation. Rather, they're basically meant to match inflation. What this means is that if benefits get a larger COLA in 2027, it will come at the cost of higher prices. In other words, what you gain in terms of bigger checks, you might lose by: Paying more for groceries, Spending more money to fill up your car, Having higher utility bills."

"If 2027's Social Security COLA comes in at 3.9%, it will be an indication that soaring inflation stuck around for much of 2026. That could put you in a bad position in the near term, and not necessarily a much better one in the"

Millions of older Americans rely on Social Security to cover living costs, and benefits receive an annual cost-of-living adjustment based on inflation. Without COLAs, benefits would fall behind rising prices, especially for retirees who do not have investment assets that can outpace inflation. In 2026, benefits received a 2.8% COLA, which disappointed many seniors. Projections for 2027 have increased after inflation readings, with the Senior Citizens League estimating a 3.9% COLA after previously expecting 2.8%. A higher COLA does not guarantee improved purchasing power because it typically reflects higher prices, which can raise spending on groceries, fuel, and utilities.

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